rue21 inc. Reports Operating Results (10-Q)

Rue21 Inc has a market cap of $704.1 million; its shares were traded at around $25.26 with a P/E ratio of 17.5 and P/S ratio of 0.9.

Highlight of Business Operations:

Net sales increased 18.9% to $205.6 million in the first quarter of 2012, compared to $172.9 million in the first quarter of 2011. Comparable store sales increased 1.7% in the first quarter of 2012 on top of an increase of 5.2% in the first quarter of 2011.

During the first quarter of 2012, our net sales increased 18.9%, or $32.7 million, to $205.6 million as compared to $172.9 million in the first quarter of 2011. This increase in net sales was due to an approximate 15% increase in the number of transactions, driven by new store openings during the first quarter of 2012. Net sales also increased primarily due to an increase of approximately 4% in the average dollar value of transactions. The average dollar value of transactions increased due to an increase in average unit retail offset by a slight decrease in units per transaction. During the first quarter of 2012, we opened 40 new stores compared to 39 new stores in the first quarter of 2011. Our comparable store sales increased 1.7% in the first quarter of 2012 compared to an increase of 5.2% in the first quarter of 2011. There were 635 comparable stores and 160 non-comparable stores open at April 28, 2012 compared to 533 and 144, respectively, at April 30, 2011.

Gross profit increased 18.5%, or $12.4 million, in the first quarter of 2012 to $79.7 million as compared to $67.2 million in the first quarter of 2011. Gross margin decreased 10 basis points to 38.8% for the first quarter of 2012 from 38.9% for the first quarter of 2011. Merchandise margin for the first quarter of 2012 was flat as a percentage of sales as compared to first quarter of 2011. This decrease in gross margin was attributable to increased store occupancy and distribution center costs related to our recent infrastructure expansion.

Selling, general and administrative expense increased 18.6%, or $8.4 million, to $53.8 million in the first quarter of 2012 as compared to $45.4 million in the first quarter of 2011. As a percentage of net sales, selling, general and administrative expense was flat at 26.2% in the first quarter of 2012 and the first quarter of 2011.

Depreciation and amortization expense increased by $1.4 million to $7.5 million in the first quarter of 2012 as compared to $6.1 million in the first quarter of 2011. Depreciation and amortization expense increased as a percentage of net sales to 3.7% in the first quarter of 2012 as compared to 3.5% in the first quarter of 2011. This increase was driven by capital expenditures relating to new store openings.

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